# HDFC Infinia / DCB Rewards - is it really 33.3% ?

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chai_lover

I’ve got DCB few months back and have been really excited to get 33.3% cash-back value. However, while doing some fun maths, I realised something which is not very obvious. In my mind, I was assuming this as 33.3% discount which is not correct. I knew that discount and cash-back are different but at the back of my end I thought they would be quite closer to each other. But it seems I was wrong and it becomes more evident at higher values. Let me put it across with few examples:

Say, Price of product = Rs 100

Discount Scenario
Discount = 10%
Net Amount Paid = 90
Net Value = 100
=> Discount = (100-90)/100% = (Net Value – Net Amount Paid ) / (Net Value)%

Cashback Scenario
Net Amount Paid = 100
Cashback = 10 (some product worth Rs 10 like travel vouchers)
Net Value = 110
=> Equivalent Discount = (110-100)/110% = 9.1%

Yeah, we got this but there is only <1% difference, which we can easily ignore!! What’s the point!

Now, let’s do the same thing to the 33.3% rewards points.
Say, price of a 10x gift voucher = 150
Rewards point gained = 5*10 = 50
Net Value = 150+50 = 200 ( assuming 50 points = Rs 50 for travel )
=> Equivalent Discount = (200-150)/200 = 25%

aah, I see where this is going

Since I’ve just recently got the card, I don’t have experience of redeeming the reward points. But I think it’s fair to assume that if we book the flights/hotel from elsewhere we can easily get 10% discount which we won’t get in booking via SmartBuy rewards points. If this is right, there is a 10% loss here.
=> 50 rewards point = Rs 45 Value for travel
=> Equivalent Discount = ((150+45)-150)/(150+45) = 45/195 = 23.1%

pheww..you are breaking my heart, please stop

This one might be an overkill but can’t stop myself from sharing. Generally, we collect the points throughout the year and do trips say once or twice in a year. We can fairly assume that on an average reward points are sitting idle for around 6 months on an average in the account. Taking, 6% nominal yearly interest ( what we can earn putting our idle money elsewhere ), we can say that we are losing 3% value due to opportunity cost because of these reward points. Not sure what’s the best way to include this in calculation, but here’s what I did.
=> 50 rewards point = 50 * (100-3)% * (100-10)% = 43.65
=> Equivalent Discount = 43.65/193.65 = 22.5%

…you are mean…bro…

PS: These are still few of the best rewarding cards, it’s just that if the above calculations are correct, we should probably think about the rewards in a slight different way than casually saying 33.3%.

Edit: Since few are getting confused, the cashback being referred here is not hard cash but product/services of the amount equivalent to cashback. Adding one more generic example to elaborate my point.

Rs 100 product at 50% discount costs Rs 50. => at Rs 100 you can get products of value Rs 200.
Now, in cash-back scenario, with Rs 100 product you are getting a product of Rs 50 free. => at Rs 100 you are getting products of value Rs 150. => effective discount = 50/150 = 33% only.

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totally wrong. There is no direct cash back here. It is rewards point whose value vary depending on how u redeem.

@chai_lover Your math is definitely correct but there’s a mistake at the core understanding I guess… Let’s say you are buying a stuff worth 100 at 10% discount then you only spent 90 bucks; now let’s say you add another item worth 10 without any discount, then you bought an item of 100+10 at 90+10 which is equivalent to 10% CB for 100 and using that 10 CB for another item of 10 bucks…
In simple words, your first use case scenario where you explained the 10 vs 9.1 was flawed because in the discount scenario you only took a spend of 90 bucks whereas on the cashback scenario you took a spend of 100 bucks; not exactly an equivalent but rather a proportionate comparison… Rest, completely agree on the other points; nice efforts (y)

BlueFlash wrote:

@chai_lover Your math is definitely correct but there’s a mistake at the core understanding I guess… Let’s say you are buying a stuff worth 100 at 10% discount then you only spent 90 bucks; now let’s say you add another item worth 10 without any discount, then you bought an item of 100+10 at 90+10 which is equivalent to 10% CB for 100 and using that 10 CB for another item of 10 bucks…
In simple words, your first use case scenario where you explained the 10 vs 9.1 was flawed because in the discount scenario you only took a spend of 90 bucks whereas on the cashback scenario you took a spend of 100 bucks; not exactly an equivalent but rather a proportionate comparison… Rest, completely agree on the other points; nice efforts (y)

but it is not the case? In case of discount, I’ll have to pay 90 only to get products of value 100. And in your case of Rs 10 free product, I’m paying 100 to get products of Rs. 110.

nomag wrote:

totally wrong. There is no direct cash back here. It is rewards point whose value vary depending on how u redeem.

Didn’t get you! I’ve taken the best case scenario of redeeming the reward points for travel. I’m trying to compare discounts vs best case of reward points. Could you elaborate your point?

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chai_lover wrote:

but it is not the case? In case of discount, I’ll have to pay 90 only to get products of value 100. And in your case of Rs 10 free product, I’m paying 100 to get products of Rs. 110.

I completely agree with you that Discount is better than Cashback/Rewards any day; But you still get the same effective value in both provided you spend the same amount at the end of the day… Different perspective

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BlueFlash wrote:

I completely agree with you that Discount is better than Cashback/Rewards any day; But you still get the same effective value in both provided you spend the same amount at the end of the day… Different perspective

no bro..I don’t think we are getting the same value…I’m might be wrong but let me take the liberty of sharing another example to elaborate my point, hope you won’t mind.

Rs 100 product at 50% discount costs Rs 50. => at Rs 100 you can get products of value Rs 200.
Now, in product cash-back scenario, with Rs 100 product you are getting a product of Rs 50 free. => at Rs 100 you are getting products of value Rs 150. => effective discount = 50/150 = 33% only.

What do you think?

Both are same, lets take a simple example.

If the product cost is 100/- for 50% discount, we pay only 50/-

In case of cashback, first we have to pay 100/- but later we get 50/- cashback, it means 100 – 50 = 50/- only.

In both cases we pay 50/- rupees only, that’s it.

Conclusion: don’t use Scientific Calculator just use Simple Calculator, you will get the answer.

SumanTmpl wrote:

Both are same, lets take a simple example.

If the product cost is 100/- for 50% discount, we pay only 50/-

In case of cashback, first we have to pay 100/- but later we get 50/- cashback, it means 100 – 50 = 50/- only.

In both cases we pay 50/- rupees only, that’s it.

Conclusion: don’t use Scientific Calculator just use Simple Calculator, you will get the answer.

bro, the cash-back here is not hard cash but some other product of the same amount.

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BlueFlash wrote:

I completely agree with you that Discount is better than Cashback/Rewards any day; But you still get the same effective value in both provided you spend the same amount at the end of the day… Different perspective

Option1: Puchasing a mobile worth 10k at 10 percent instant discount you pay 9000.
Option2: Purchasing same mobile at 10 percent cashback you pay 10k.

Suppose a Affiliate site is giving 5 percent cashback on that mobile.
Then cashback option is more profitable because it is applied on paid amount.
Option1 effective price is 8550
Option2 effective price is 8500

VU + KG for MATH

raghuramn wrote:

VU + KG for MATH

.

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chai_lover wrote:

bro, the cash-back here is not hard cash but some other product of the same amount.

Don’t think too much bro, I have Dinners Black CC but I always assume that I get only 16.5% rewards rather than 33% because I don’t travel much, for me is best redemption is Amazon Voucher only. So not bad even if it is a 16.5% because no other CC gives that much value rewards.

Your maths is flawed. Discount is always considered on price we pay and not your made up value. I will take your last example where you pay 100 and get 50 discount. So price we pay is 100 and not 150. Discount is 50. So simple maths says I pay 100 ₹ to get 150₹ product. I gained ₹50 on my investment of ₹100. Profit is 50%. Don’t complex things and keep your funda straight

Beauty lies in the eyes of beholder

A neem tree might not look beautiful to one but another one might find it pleasant

Credit Card rewards are just like that

SCB Ultimate offers 3.33% value but redemption options are limited
Axis ACE or Indusind Iconia Amex (weekend) offers 2% cashback which is adjustable against outstanding
Axis Flipkart or Amazon Pay offer 5% unlimited cashback on their respective sites (Apay CB is their own GV, Axis FK is statement credit)
HDFC Infinia/DCB give 33.33% rewards ratio but value of that is based on user’s perception
E.g. some real user bought some stuff, got 33.33% RP and now he can redeem it for free flights or hotels so he might consider it superb
And even when he can use only 70% he is still earning 10x on 30% spent
But if you go in real calculation then flights usually give 8%-15% 1000-1500 discount but their convenience fees is much higher so that discount just covers discount at times, hdfc smartbuy portal charges flat 236 per booking instead of per passenger
Hotels definitely have much higher discounts on other sites 20-40% so redeeming for hotels won’t be enticing
But eventually you are not having further big outgo if you use 70% rp so thats cash saving
people even trade their reward points also so value goes even lower say 10-15%
Still except Amex none gives aboce 5% return
Amex in certain conditions provide better return for card features (not even counting their promotions)
So it’s to each his own!

A2Zdeals wrote:

Beauty lies in the eyes of beholder

A neem tree might not look beautiful to one but another one might find it pleasant

Credit Card rewards are just like that

SCB Ultimate offers 3.33% value but redemption options are limited
Axis ACE or Indusind Iconia Amex (weekend) offers 2% cashback which is adjustable against outstanding
Axis Flipkart or Amazon Pay offer 5% unlimited cashback on their respective sites (Apay CB is their own GV, Axis FK is statement credit)
HDFC Infinia/DCB give 33.33% rewards ratio but value of that is based on user’s perception
E.g. some real user bought some stuff, got 33.33% RP and now he can redeem it for free flights or hotels so he might consider it superb
And even when he can use only 70% he is still earning 10x on 30% spent
But if you go in real calculation then flights usually give 8%-15% 1000-1500 discount but their convenience fees is much higher so that discount just covers discount at times, hdfc smartbuy portal charges flat 236 per booking instead of per passenger
Hotels definitely have much higher discounts on other sites 20-40% so redeeming for hotels won’t be enticing
But eventually you are not having further big outgo if you use 70% rp so thats cash saving
people even trade their reward points also so value goes even lower say 10-15%
Still except Amex none gives aboce 5% return
Amex in certain conditions provide better return for card features (not even counting their promotions)
So it’s to each his own!

Didn’t know about the flat 236 convenience fee for flights in smartbuy portal, thanks for letting know, will prefer this next time… I had just booked a flight in MMT where convenience fee itself came to 1K (3 people) basically nullifying the ~1K bank discount that it gives :|

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JaiKrish1031 wrote:

Option1: Puchasing a mobile worth 10k at 10 percent instant discount you pay 9000.
Option2: Purchasing same mobile at 10 percent cashback you pay 10k.

Suppose a Affiliate site is giving 5 percent cashback on that mobile.
Then cashback option is more profitable because it is applied on paid amount.
Option1 effective price is 8550
Option2 effective price is 8500

Agreed, but what if you only have 9K left in your account/cc, you can’t afford to spend full 10k and get back 1k; cashbacks/rewards forces the user to buy something extra next time, but instant discount is right on the shelf, this is why I feel instant discount is better than cb/rewards…

The cashback points are provided that way only. You are calculating discount as 10% of 100 = 10, net effective you paid is 90. This is undoubtedly correct.

But your calculation where you are adding cashback of rs 10 to make net value = 110 is wrong. Your total spends here is also 100. Now on that you have reward points of 10% that makes it 90. There’s no doubt you will not get cashback/discount on the 10% cashback value but then most of the discounts provided by the websites/apps is only one time.

Instant discount is definitely better than cashback as there is no cashback on cashback amounts.

Obviously getting 100rs items at 90rs is a greater deal than 110rs items at 100.

But you need to understand that Cashback value is 33.3 % of the transaction and including that in your calculation is not correct.

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BlueFlash wrote:

Didn’t know about the flat 236 convenience fee for flights in smartbuy portal, thanks for letting know, will prefer this next time… I had just booked a flight in MMT where convenience fee itself came to 1K (3 people) basically nullifying the ~1K bank discount that it gives :|

For single ticket, hdfc smartbuy seems useless but for multiple tickets it’s the best.

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chai_lover wrote:

no bro..I don’t think we are getting the same value…I’m might be wrong but let me take the liberty of sharing another example to elaborate my point, hope you won’t mind.

Rs 100 product at 50% discount costs Rs 50. => at Rs 100 you can get products of value Rs 200.
Now, in product cash-back scenario, with Rs 100 product you are getting a product of Rs 50 free. => at Rs 100 you are getting products of value Rs 150. => effective discount = 50/150 = 33% only.

What do you think?

Why you spending only 100 for Cashback scenario
Spend 200 and get 50% cashback = Rs.100,
so in this case also you get product of Rs.200 for Rs.100,
the only difference in discount is your Rs.100 is not stuck with the site giving offer
and in Cashback you are forced to use Rs.100 on the same site again.

In discount scenario you are adding Rs.200 product to the cart , while in the cashback scenario
you are adding product of Rs.100 only to the cart , this is where your calculation goes wrong

Really a nice eye opening post. Thanks to @chai_lover & @ A2Zdeals.

Here’s my take to this ..
In few months HDFC will realize that they have got enough customer base and will start reducing the rewards via smartbuy. They have done the same to Payzapp.

Post that we will start appreciating our apay icici and fk axis cards again. However the DCB / infinia rewards will be much used for all spends which doesn’t give direct discounts, as they still will give the best RP valuation. Unknowingly keeping using it and suddenly during that trip we take, we will be surprised to see that 70% of it is being discounted by the accumulated points.

So basically enjoy the 33% or take it as 16.5% (via amazon voucher) as long it lasts, post that make it a card to use wherever there’s no offer to accumulate that sweet 3.33% without even giving it a second thought.

the problem is the current pandemic scenario, travelling is not easy and the value of reward points are best calculated at 0.5 paisa.. it would be good if they can bring recharge at 0.75% value.

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